Make the Most of Your Small Business $20,000 Incentives

Published on November 21, 2017 at 12:00 AM

If you’re earning less than $10 million in turnover, then you qualify as a small business in the eyes of the tax department. A previous government initiative to give these small businesses the capabilities to buy more important equipment was extended to 2018, so now is the time to look closely at the opportunities presented by that $20,000 immediate write-off.

Essentially the $20,000 immediate write-off incentive is a deduction that a qualifying small business can make on each and every purchase that costs less than $20,000. In addition, it can be used for both new and second hand purchases, giving you the opportunity to make purchases of equipment that would otherwise be outside of the $20,000 threshold.

Absolutely any equipment that is essential to running your business can be purchased through this small business incentive. Examples include a new coffee machine for a café, or new computers for an IT company. A factory might find value in a new machine that can produce goods more quickly, or a company might purchase a car for a sales agent to spend more time on the road.

Now is the time to take advantage of this small business incentive. Unless the government opts to expand the programme out at the end of the financial year, after June 30, 2018, the threshold for equipment to be deductible in full drops to $1,000. The initial intent of the initiative was for this reduction in the deductible to occur in this financial year, so the government has already pushed the incentive out by one year, so there can be no guarantee that it will happen again.

In other words, now is the time to make those investments. Identify where your business needs new equipment or other assets, and the organise the cash flow or finance facility to make the purchase and installation of the asset prior to Jun 30, 2018. It’s important that the asset is in operation by that point.

For more information on how the small business tax incentive might affect you, or how you can capitalise on it, please contact Chapman’s Accountants on 02 4396 4322.